On November 13th, Prosper Portland’s Board of Commissioners voted unanimously to purchase a 5.18-acre vacant property at the southwest corner of NE 102nd Avenue and Pacific Street. This $10.6 million investment from the Gateway Tax Increment Financing District funds will hold the property while the developer restructures financing for a planned middle-income complex that will bring at least 216 housing units in an expansive mixed-use project that could become a catalyst for other area development.
The conglomeration of large open land started around the formation of the Gateway Urban Renewal District by one of its advisory committee members, Ted Gilbert. “I assembled it over a period of years, starting in 1998. There were numerous parcels. There were some apartments and individual rental houses there that had reached the point of obsolescence,” remembered Gilbert. As his group of investors neared the purchase of another adjacent parcel that would have given them a combined ten acres, their crews cleared the site, leaving just one brick building standing. “I had visions for it in 2005,” explained Gilbert. He and his partners planned to construct a sizeable 40,000-square-foot Class A office building on the site and had pre-lease commitments for nearly 50 percent of the offices. However, the group paused the project, not wanting to be the first builder in the area to set the scale and direction of the district without seeing what other builders envisioned.
Not long after slowing the office building project, the 2008 financial crisis halted plans for the foreseeable future. They gave up the property purchase west of the site, and the David Douglas School District bought the adjacent 5.5 acres for a future multi-story elementary school. After the economy stabilized, the project for the site changed focus to become a multi-generational community. The new partners wanted to use their experience creating senior living centers to construct a place for workforce housing near their planned retirement community. “And then the pandemic hit. It was particularly challenging for the senior housing business, literally a life and death issue,” recalled Gilbert. Uncertain about the future, the investors wanted out of the project, and the group opted to sell the land to Tom Cody, who had a concept for creating a prototype development. “He has a vision to deliver workforce housing that is both highly attractive, highly desirable, and more affordable than the way it’s being developed right now,” said Gilbert.
Tom Cody’s modular housing company, Modomi Gateway Development, currently owns the NE 102nd Avenue and Pacific Street property. Cody is also the president of a development company called Project^ that plans to construct the workforce housing at this site. Prosper Portland will soon purchase the property after a 90-day due diligence period and a 30-day closing term. The negotiated price for the 5.18 acres is less than the $11.1 million initially invested by Cody and partners. The property sellers have three years to repurchase the parcels at the same sale price adjusted upward against the Consumer Price Index for Urban Consumers. If the development team does not progress toward building the housing at this site after two years, Prosper Portland can begin canceling the repurchase option after giving notice. Prosper Portland could also retain the property and let the housing project proceed with a ground lease.
Prosper Portland staff and Cody expressed confidence that this housing project would proceed, partly thanks to this short-term sale. The development company is almost done with its first implementation of this modular production process, which has created 87 housing units in Bend, OR. The Port of Portland approved a lease to Modomi, a subsidiary of Project^, at Terminal 2 along the Willamette River. The company intends to convert an existing warehouse into its local modular housing manufacturing facility. In multi-story modular housing production, crews build nearly move-in-ready units in a factory setting. Trucks transport segments to the site, and cranes assemble them like bricks to form the final multi-story structure. Cody explained to the Prosper Portland Board at its November 13th meeting that he has the State of Oregon’s permit approval to start building these units and needs to refinance this project to move forward. “We’ve invested $8 million in a factory at Terminal 2 in the Port of Portland, so I’m currently also working to restructure that arrangement and work with new partners on getting that factory up and running to produce modules to serve Gateway,” said Cody as part of his invited testimony.
Prosper Portland’s commitment to buying the Modomi site will ensure that this prominent property near the Fred Meyer store and the Gateway Transit Center becomes housing and can act as a catalyst for other developments. Staff presenting to the Prosper Portland Board acknowledged that this Tax Increment Financed (TIF) District fell short of its mixed-income housing goals. Of the desired 3,900 new units of multifamily transit-oriented housing, developers have only delivered 707 units since 2010. Additionally, 89% of those units are deed-restricted affordable housing. The presenters explained that thriving business districts depend on people living around them with a mix of income levels to support diverse store options. Up to this point, many property owners in the area have waited to build their workforce and market-rate housing. Receiving development financing from banks or investors often depends on showing comparable examples of successful projects. Joel Devalcourt, with Prosper Portland, explained that many surrounding property owners are looking to see if this project can succeed. “For the last two and a half years, we have talked to numerous land owners, those who are land banked to a degree, and then those who are very much interested in redevelopment, and everyone has been looking for the right dominoes to fall,” said Devalcourt to the Prosper Portland Board.
Development at the NE 102nd Avenue and Pacific Street site is likely years from breaking ground. However, if Cody can make this project work, it could have substantially positive effects for Portland. Workforce housing at the site will fulfill a decades-long vision for a multi-income community centered in Gateway and potentially lead to the redevelopment of more vacant property in the district. Additionally, Cody’s pursuit of modular construction may prove to be more significant for housing creation than just building 216 homes in Gateway. If modular housing production succeeds as a cheaper and faster building method, other projects could use the Modomi facility at Terminal 2 to produce housing units throughout the metro area. Until crews begin work within the next decade, Prosper Portland is investigating ways to temporarily activate the future housing site and the David Douglas School District property to better meet the surrounding community’s needs.
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